Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing of a Proposed Rule Change To Expand BZX Rule 14.11(l) To Permit the Generic Listing and Trading of Multi-Class ETF Shares, 92989-92992 [2024-27477]

Download as PDF Federal Register / Vol. 89, No. 227 / Monday, November 25, 2024 / Notices operational capacity to participate in the default auction process to choose not to participate in an auction rather than requiring them to place a bid.95 It would also work to identify, manage, and avoid issues LCH SA has encountered with its Select Members in navigating fire drill exercises.96 Thus, these aspects of the Proposed Rule Change would work to improve LCH SA’s auction process. Therefore, the Proposed Rule Change is consistent with the requirements of Rule 17Ad–22(e)(13) under the Act.97 C. Consistency With Rule 17Ad– 22(e)(18) Under the Act Rule 17Ad–22(e)(18) requires covered clearing agencies to establish, implement, maintain, and enforce written policies and procedures reasonably designed to establish objective, risk-based, and publicly disclosed criteria for participation, which permit fair and open access by direct and, where relevant, indirect participants and other financial market utilities.98 As noted above, the Proposed Rule Change would expand access to LCH SA and facilitate fair and open access to LCH SA by indirect participants by allowing Select Members to provide clearing services to non-affiliated firms rather than just to Affiliated Firms. The Proposed Rule Change also would establish objective and publicly-disclosed criteria for participation by Applicants wishing to be Select Members, with respect to participation in competitive bidding, as discussed above. Therefore, the Proposed Rule Change is consistent with the requirements of Rule 17Ad–22(e)(18) under the Act.99 khammond on DSK9W7S144PROD with NOTICES IV. Accelerated Approval of Proposed Rule Change, as Modified by Amendment No. 1 and Partial Amendment No. 1 The Commission finds good cause, pursuant to Section 19(b)(2) of the Exchange Act,100 to approve the Proposed Rule Change prior to the 30th day after the date of publication of notice of the filing of Amendment No. 1 and Partial Amendment No. 1 in the Federal Register. As discussed above, Amendment No. 1 added a requirement that a Select Member participate in Competitive Bidding in default auctions and contribute end-of-day prices should its Financial Group’s margins exceed a predetermined threshold over a 95 Notice, 89 FR at 21579. at 21582. 97 17 CFR 240.17Ad–22(e)(13). 98 17 CFR 240.17Ad–22(e)(18). 99 17 CFR 240.17Ad–22(e)(18). 100 15 U.S.C. 78s(b)(2). 96 Id. VerDate Sep<11>2014 18:29 Nov 22, 2024 Jkt 265001 designated time, and Partial Amendment No. 1 fixes certain errors in Amendment No. 1. These amendments do not otherwise change the purpose of or statutory basis for the Proposed Rule Change. For the reasons discussed above, the Commission finds that Proposed Rule Change, as modified by Amendment No. 1 and Partial Amendment No. 1, is consistent with the requirement that LCH SA’s rules be designed to promote the prompt and accurate clearance and settlement of securities transactions under Section 17A(b)(3)(F) of the Exchange Act.101 Accordingly, the Commission finds good cause, pursuant to Section 19(b)(2) of the Exchange Act,102 to approve the Proposed Rule Change, as modified by Amendment No.1 and Partial Amendment No. 1, on an accelerated basis, pursuant to Section 19(b)(2) of the Exchange Act.103 IV. Conclusion On the basis of the foregoing, the Commission finds that the Proposed Rule Change, as modified by Amendment No. 1 and Partial Amendment No. 1, is consistent with the requirements of the Act, and in particular, Section 17A(b)(3)(F) of the Act 104 and Rules 17Ad–22(e)(13) 105 and (e)(18) thereunder.106 It is therefore ordered pursuant to Section 19(b)(2) of the Act that the Proposed Rule Change, as modified by Amendment No. 1 and Partial Amendment No. 1 (SR–LCH SA–2024– 002), be, and hereby is, approved on an accelerated basis.107 For the Commission by the Division of Trading and Markets, pursuant to delegated authority.108 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2024–27476 Filed 11–22–24; 8:45 am] BILLING CODE 8011–01–P 101 15 U.S.C. 78q–1(b)(3)(F). U.S.C. 78s(b)(2). 103 15 U.S.C. 78s(b)(2). 104 15 U.S.C. 78q–1(b)(3)(F). 105 17 CFR 240.17Ad–22(e)(13). 106 17 CFR 240.17Ad–22(e)(18). 107 In approving the Proposed Rule Change, the Commission considered the proposal’s impacts on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 108 17 CFR 200.30–3(a)(12). 102 15 PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 92989 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–101655; File No. SR– CboeBZX–2024–112] Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing of a Proposed Rule Change To Expand BZX Rule 14.11(l) To Permit the Generic Listing and Trading of MultiClass ETF Shares November 19, 2024. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on November 8, 2024, Cboe BZX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BZX’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe BZX Exchange, Inc. (‘‘BZX’’ or the ‘‘Exchange’’) is filing with the Securities and Exchange Commission (‘‘Commission’’ or ‘‘SEC’’) a proposed rule change to amend Rule 14.11(l) to provide that the Exchange may approve a series of Exchange-Traded Fund (‘‘ETF’’) Shares for listing and/or trading on the Exchange that operates in reliance on exemptive relief to Rule 6c– 11 under the Investment Company Act of 1940 (the ‘‘Investment Company Act’’) that permits the trust issuing the ETF Shares to offer an exchange-traded fund class in addition to classes of shares that are not exchange-traded. The text of the proposed rule change is also available on the Exchange’s website (https://markets.cboe.com/us/ equities/regulation/rule_filings/bzx/), at the Exchange’s Office of the Secretary, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the 1 15 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. E:\FR\FM\25NON1.SGM 25NON1 92990 Federal Register / Vol. 89, No. 227 / Monday, November 25, 2024 / Notices places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend Rule 14.11(l) to provide that the Exchange may approve a series of ETF Shares for listing and/or trading on the Exchange where such series operates in reliance on exemptive relief to Rule 6c– 11 under the Investment Company Act that permits the trust issuing the ETF Shares to offer ETF Shares in addition to classes of shares that are not exchange-traded (‘‘Multi-class ETF Shares’’) of an open-end fund.3 There are numerous applications for exemptive relief for Multi-class ETF Shares currently before the Commission 4 that request exemptive relief similar to that previously granted to other funds that are not listed on the Exchange.5 This proposed amendment would provide for the ‘‘generic’’ listing and/or trading of Multi-class ETF Shares under Rule 14.11(l) on the Exchange immediately upon the Commission’s applicable order granting exemptive relief to the outstanding applications. This proposal is not intended to amend any other part of Rule 14.11(l) and the Exchange submits this proposal only to prevent any unnecessary delay in listing additional Multi-Class ETF Shares generically under Rule 14.11(l) when and if such requests are granted by the Commission. khammond on DSK9W7S144PROD with NOTICES Background Starting in 2000, the Commission began granting limited relief for The Vanguard Group, Inc. (‘‘Vanguard’’) to offer certain index-based open-end management investment companies 3 The Exchange notes that it had previously submitted a version of this filing on April 15, 2024. See Securities Exchange Act Release No. 34–100034 (May 1, 2024) 89 FR 35255. That filing was withdrawn on November 8, 2024 and submitted this proposal. 4 See Perpetual US Services, LLC (filed February 7, 2023); DFA Investment Dimensions Group Inc. and Dimensional Investment Group Inc. (filed July 12, 2023); F/m Investments LLC (August 22, 2023); Fidelity Hastings Street Trust and Fidelity Management & Research Company (filed October 24, 2023); Morgan Stanley Institutional Fund Trust and Morgan Stanley Investment Management Inc. (filed January 29, 2024); First Trust Series Fund and First Trust Variable Insurance Trust (filed January 24, 2024); Guinness Atkinson Funds (filed February 27, 2024); and Metropolitan West Funds, TCW ETF Trust, and TCW Funds, Inc. (filed March 20, 2024). 5 Infra note 6. VerDate Sep<11>2014 18:29 Nov 22, 2024 Jkt 265001 with Multi-class ETF Shares.6 After this relief was granted, there was limited public discourse about Multi-class ETF Shares until 2019, when the prospect of providing blanket exemptive relief to Multi-class ETF Shares was addressed in the Commission’s adoption of Rule 6c–11 under the Investment Company Act (the ‘‘ETF Rule’’).7 The ETF Rule permits ETFs that satisfy certain conditions to operate without the expense or delay of obtaining an exemptive order. However, the ETF Rule did not provide blanket exemptive relief to allow for Multi-class ETF Shares as part of the final rule. Instead, the Commission concluded that Multiclass ETF Shares should request relief through the exemptive application process so that the Commission may assess all relevant policy considerations in the context of the facts and circumstances of particular applicants. The Exchange adopted Rule 14.11(l) 8 shortly after the implementation of the ETF Rule and, because there were no exemptive applications before the Commission and because none of the Multi-class ETF Shares that were previously granted exemptive relief listed on the Exchange, did not propose to include any language comparable to what is being proposed herein. As noted above, a number of applications for exemptive relief to permit the applicable fund to offer Multi-class ETF Shares (the ‘‘Applications’’) have been submitted to the Commission starting in early 2023. In general, the Applications state that 6 See Vanguard Index Funds, Investment Company Act Release Nos. 24680 (Oct. 6, 2000) (notice) and 24789 (Dec. 12, 2000) (order). The Commission itself, as opposed to the Commission staff acting under delegated authority, considered the original Vanguard application and determined that the relief was appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. In the process of granting the order, the Commission also considered and denied a hearing request on the original application, as reflected in the final Commission order. See also the Vanguard Group, Inc., Investment Company Act Release Nos. 26282 (Dec. 2, 2003) (notice) and 26317 (Dec. 30, 2003) (order); Vanguard International Equity Index Funds, Investment Company Act Release Nos. 26246 (Nov. 3, 2003) (notice) and 26281 (Dec. 1, 2003) (order); Vanguard Bond Index Funds, Investment Company Act Release Nos. 27750 (Mar. 9, 2007) (notice) and 27773 (April 2, 2007) (order) (collectively referred to as the ‘‘Vanguard Orders’’). 7 See Securities Exchange Act Release No. 33– 10695 (October 24, 2019) 84 FR 57162 (the ‘‘ETF Rule Adopting Release’’). 8 See Securities Exchange Act No. 88566 (April 6, 2020) 85 FR 20312 (April 10, 2020) (SR–CboeBZX– 2019–097) (Notice of Filing of Amendment No. 2 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 2, To Adopt BZX Rule 14.11(l) Governing the Listing and Trading of Exchange-Traded Fund Shares). PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 the ability of a fund to offer Multi-class ETF Shares, i.e., both a class of mutual fund shares (each such class, a ‘‘Mutual Fund class’’ and such shares ‘‘Mutual Fund Shares’’) and ETF Shares, could be beneficial to the fund and to shareholders of each type of class for various reasons, including more efficient portfolio management, better secondary market trading opportunities, and cost efficiencies, among others.9 While Multi-class ETF Shares could potentially be listed under existing Exchange Rules 14.11(c) or 14.11(i), doing so would unnecessarily reintroduce the burdensome quantitative portfolio requirements and ongoing compliance obligations associated therewith that existed before the adoption of Rule 6c–11 and Exchange Rule 14.11(l).10 The Exchange is not 9 Specifically, the Applicants believe that a Mutual Fund class would benefit ETF class shareholders because investor cash flows through a Mutual Fund class can be used for efficient portfolio rebalancing. To the extent that cash flows come into a fund through a Mutual Fund class, a portfolio manager may be able to deploy that cash strategically to rebalance the portfolio. Second, cash flows through a Mutual Fund class may allow for greater creation basket flexibility for creations and redemptions through the ETF class, which could promote arbitrage efficiency and smaller spreads on the trading of ETF Shares in the secondary market. With respect to existing funds, ETF classes would permit investors that prefer the ETF structure to gain access to established funds’ investment strategies. Additionally, the establishment of an ETF class as part of an existing fund could lead to cost efficiencies. Specifically, in terms of fund expenses, an ETF class could have initial and ongoing advantages for its shareholders, where shareholders of an ETF class of a fund that already has substantial assets could immediately benefit from economies of scale. Finally, the tax-free conversion of shares from the Mutual Fund class to the ETF class may accelerate the development of an ETF shareholder base. Subsequent secondary market transactions by the ETF class shareholders could generate greater trading volume, resulting in lower trading spreads and/or premiums or discounts in the market prices of the ETF Shares to the benefit of ETF shareholders. The Applicants also believe that an ETF class would benefit Mutual Fund class shareholders because in-kind transactions through the ETF class may contribute to lower portfolio transaction costs and greater tax efficiency. Additionally, the conversion feature could allow Mutual Fund shareholders to convert Mutual Fund Shares for ETF Shares without adverse consequences to the Fund by allowing Mutual Fund shareholders to convert their shares into the ETF class of the same fund rather than redeeming their Mutual Fund Shares and buying shares of another ETF. In doing so, the converting shareholder could save on transaction costs and potential tax consequences that may otherwise be incurred in redeeming their existing shares and buying separate ETF Shares. The ETF class would also represent an additional distribution channel for a fund that could lead to additional asset grown and economies of scale; greater assets under management may lead to additional cost efficiencies and an improved tax profile for the fund may also assist the competitive position of the Fund for attracting prospective shareholders. Last, the class of ETF Shares could allow certain investors to engage in more frequent trading without disrupting the fund’s portfolio. 10 See e.g., Exchange Rule 14.11(c) and 14.11(i). E:\FR\FM\25NON1.SGM 25NON1 Federal Register / Vol. 89, No. 227 / Monday, November 25, 2024 / Notices aware of any clear policy rationale as to why those quantitative requirements should apply to Multi-class ETF Shares other than the rules are already in place. As such, listing Multi-class ETF Shares under these older rules would place undue burdens on both the Exchange and fund issuers because of the quantitative portfolio requirements that currently do not apply to ETFs meeting the requirements of Rule 6c–11 and Rule 14.11(l). Furthermore, while the Applicants generally seek the same exemptive relief as granted under those previous orders,11 several Applicants have proposed different conditions to the relief that reflect the adoption of Rule 6c–11. Therefore, the Exchange believes there is a reasonable relationship between the Applications and the proposed rule change to allow for the Commission’s evaluation of whether the proposed rule change is consistent with the Act. The Exchange also acknowledges that approval of this proposed rule change would not necessarily result in the listing and trading of the additional Multi-class ETF Shares under the proposed Rule until and unless the necessary relief was granted by the Division of Investment Management, but approving this proposal would address any potential concerns the Commission’s division of Trading and Markets might have as it specifically relates to the listing and trading of Multi-class ETF Shares under proposed Rule 14.11(l) and would allow for a smooth launch process if an when such relief is granted.12 Proposal The Exchange proposes to amend Rule 14.11(l)(4) to explicitly provide that any series of ETF Shares that is eligible to operate under exemptive relief under the Investment Company Act that permits the fund to offer a class 11 Supra note 6. Commission has in some instances historically approved Exchange listing rules even when no products would necessarily be permitted to list under those rules. Most recently, the Commission approved Exchange proposals to list and trade shares of ether-based exchange-traded products (‘‘ETPs’’) prior to any such products having an effective registration statement. As those ether-based ETPs could not trade on the Exchange without an effective registration statement, which were separately considered by the Commission’s division of corporate finance, the Exchange could not list and trade those products even with proper Exchange Rules in place. The Exchange believes this example illustrates the reasonability of the Exchange pursuing the adoption a proposed Rule that would not immediately result in the listing and trading of the applicable products thereunder. See Securities Exchange Act No. 100224 (May 23, 2024) 89 FR 46937 (May 30, 2024) (Order Granting Accelerated Approval of Proposed Rule Changes, as Modified by Amendments Thereto, To List and Trade Shares of Ether-Based Exchange-Traded Products). khammond on DSK9W7S144PROD with NOTICES 12 The VerDate Sep<11>2014 18:29 Nov 22, 2024 Jkt 265001 of ETF Shares in addition to classes of shares that are not-exchange traded (i.e., Multi-class ETF Shares) may be approved by the Exchange for listing and/or trading (including pursuant to unlisted trading privileges) on the Exchange pursuant to Rule 19b–4(e) under the Act. The Exchange also proposes to explicitly provide that the requirements of any exemptive relief applicable to Multi-class ETF Shares must be satisfied by a series of ETF Shares on an initial and continued listing basis. Last, the Exchange proposes to amend Rule 14.11(l)(4)(B)(i)(a) to provide that any series of Multi-class ETF Shares that fails to meet the requirements of the applicable exemptive relief will be subject to the suspension of trading or removal provisions of Rule 14.11(l)(4)(B)(i). 2. Statutory Basis The Exchange believes the proposed rule change is consistent with Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.13 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 14 requirements that the rules of an exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. Additionally, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 15 requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. In particular, the Exchange believes that permitting Multi-class ETF Shares to list on the Exchange is consistent with the applicable exemptive relief and will help perfect the mechanism of a free and open market and, in general, will protect investors and the public interest in that it will permit the listing and trading of Multi-class ETF Shares, consistent with the applicable exemptive relief, and in a manner that will benefit investors. Specifically, the Exchange believes that the relief 13 15 14 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). 15 Id. PO 00000 Frm 00108 Fmt 4703 Sfmt 4703 92991 proposed in the Applications and the expected benefits of the Multi-class ETF Shares described above would be to the benefit of investors. Eliminating any unnecessary delay for additional Multiclass ETF Shares listing on the Exchange under Rule 14.11(l) will simply help accrue those benefits to investors more expeditiously. Further, the Exchange is only proposing to amend its rules to allow such a series of Multi-class ETF Shares to list on the Exchange pursuant to Rule 14.11(l), a change to its rules that will only be meaningful if and when the Commission grants such relief to an Applicant. To the extent that the Commission does not grant Multi-class ETF Shares relief, the proposed change to Rule 14.11(l) will have no impact on series of ETF Shares listed on the Exchange. The Exchange also believes that amending Rule 14.11(l) to explicitly provide that the initial and continued listing standards applicable to ETF Shares, including the suspension of trading or removal standards, would be applicable to Multi-class ETF Shares operating under any applicable exemptive relief, are designed to promote transparency and clarity in the Exchange’s Rules. The Exchange believes that with these changes, Rule 14.11(l)(4) would clearly allow for the listing and trading of Multi-class ETF Shares upon the Commission’s order of exemptive relief. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes the proposed rule change, by permitting the listing and trading of ETF Shares operating under Multi-class ETF Shares exemptive relief, would introduce additional competition among various ETF products to the benefit of investors. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange neither solicited nor received comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may E:\FR\FM\25NON1.SGM 25NON1 92992 Federal Register / Vol. 89, No. 227 / Monday, November 25, 2024 / Notices designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the Exchange consents, the Commission will: A. by order approve or disapprove such proposed rule change, or B. institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: khammond on DSK9W7S144PROD with NOTICES Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include file number SR– CboeBZX–2024–112 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to file number SR–CboeBZX–2024–112. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or VerDate Sep<11>2014 18:29 Nov 22, 2024 Jkt 265001 subject to copyright protection. All submissions should refer to file number SR–CboeBZX–2024–112 and should be submitted on or before December 16, 2024. (Catalog of Federal Domestic Assistance Number 59008) For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2024–27569 Filed 11–22–24; 8:45 am] [FR Doc. 2024–27477 Filed 11–22–24; 8:45 am] BILLING CODE 8011–01–P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #20732 and #20733; FLORIDA Disaster Number FL–20014] Alejandro Contreras, Acting Deputy Associate Administrator, Office of Disaster Recovery & Resilience. BILLING CODE 8026–09–P SOCIAL SECURITY ADMINISTRATION [Docket No. SSA–2022–0002] Social Security Acquiescence Ruling 24–1(6); Rescission of Social Security Acquiescence Ruling 98–3(6) and Social Security Acquiescence Ruling 98–4(6) Social Security Administration. Notice of Social Security Acquiescence Ruling (AR) and rescission of two Social Security ARs. AGENCY: ACTION: Presidential Declaration Amendment of a Major Disaster for Public Assistance Only for the State of Florida U.S. Small Business Administration. AGENCY: ACTION: Amendment 4. This is an amendment of the Presidential declaration of a major disaster for Public Assistance Only for the State of Florida (FEMA–4828–DR), dated October 5, 2024. Incident: Hurricane Helene. SUMMARY: Issued on November 1, 2024. Incident Period: September 23, 2024 through October 7, 2024. Physical Loan Application Deadline Date: December 4, 2024. Economic Injury (EIDL) Loan Application Deadline Date: July 7, 2025. DATES: Visit the MySBA Loan Portal at https://lending.sba.gov to apply for a disaster assistance loan. ADDRESSES: FOR FURTHER INFORMATION CONTACT: Vanessa Morgan, Office of Disaster Recovery & Resilience, U.S. Small Business Administration, 409 3rd Street SW, Suite 6050, Washington, DC 20416, (202) 205–6734. The notice of the President’s major disaster declaration for Private Non-Profit organizations in the State of Florida, dated October 5, 2024, is hereby amended to include the following areas as adversely affected by the disaster. SUPPLEMENTARY INFORMATION: Primary Counties: Collier, Lee, Marion, Sumter. All other information in the original declaration remains unchanged. 16 17 PO 00000 CFR 200.30–3(a)(12). Frm 00109 Fmt 4703 Sfmt 4703 The Commissioner of Social Security is giving notice of Social Security Acquiescence Ruling 24–1(6) and rescission of Social Security Acquiescence Ruling 98–3(6) and Social Security Acquiescence Ruling 98–4(6). DATES: We will apply this ruling on December 2, 2024. FOR FURTHER INFORMATION CONTACT: Mona Ahmed, Office of the General Counsel, Office of Program Law, Social Security Administration, 6401 Security Boulevard, Baltimore, MD 21235–6401, (410) 965–0600, or TTY 410–966–5609, for information about this notice. For information on eligibility or filing for benefits, call our national toll-free number, 1–800–772–1213 or TTY 1– 800–325–0778, or visit our internet site, Social Security Online, at https:// www.socialsecurity.gov. SUPPLEMENTARY INFORMATION: We are rescinding Social Security Acquiescence Ruling (AR) 98–3(6) and Social Security AR 98–4(6) and publishing this Social Security AR, in accordance with 20 CFR 402.35(b), 404.985(a), (b), and 416.1485(a), (b), to explain how we will apply the holding in Earley v. Commissioner of Social Security, 893 F.3d 929 (6th Cir. 2018), regarding the effect of prior disability findings on the adjudication of a subsequent disability claim. An AR explains how we will apply a holding in a United States Court of Appeals decision that we determine conflicts with our interpretation of a provision of the Social Security Act (Act) or regulations when the Government has decided not to seek further review of that decision or is unsuccessful on further review. On June 1, 1998, we issued AR 98– 3(6) (63 FR 29770) and AR 98–4(6) (63 SUMMARY: E:\FR\FM\25NON1.SGM 25NON1

Agencies

[Federal Register Volume 89, Number 227 (Monday, November 25, 2024)]
[Notices]
[Pages 92989-92992]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-27477]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101655; File No. SR-CboeBZX-2024-112]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing of a Proposed Rule Change To Expand BZX Rule 14.11(l) To Permit 
the Generic Listing and Trading of Multi-Class ETF Shares

November 19, 2024.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on November 8, 2024, Cboe BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe BZX Exchange, Inc. (``BZX'' or the ``Exchange'') is filing 
with the Securities and Exchange Commission (``Commission'' or ``SEC'') 
a proposed rule change to amend Rule 14.11(l) to provide that the 
Exchange may approve a series of Exchange-Traded Fund (``ETF'') Shares 
for listing and/or trading on the Exchange that operates in reliance on 
exemptive relief to Rule 6c-11 under the Investment Company Act of 1940 
(the ``Investment Company Act'') that permits the trust issuing the ETF 
Shares to offer an exchange-traded fund class in addition to classes of 
shares that are not exchange-traded.
    The text of the proposed rule change is also available on the 
Exchange's website (https://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, and at 
the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the

[[Page 92990]]

places specified in Item IV below. The Exchange has prepared summaries, 
set forth in sections A, B, and C below, of the most significant 
aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Rule 14.11(l) to provide that the 
Exchange may approve a series of ETF Shares for listing and/or trading 
on the Exchange where such series operates in reliance on exemptive 
relief to Rule 6c-11 under the Investment Company Act that permits the 
trust issuing the ETF Shares to offer ETF Shares in addition to classes 
of shares that are not exchange-traded (``Multi-class ETF Shares'') of 
an open-end fund.\3\ There are numerous applications for exemptive 
relief for Multi-class ETF Shares currently before the Commission \4\ 
that request exemptive relief similar to that previously granted to 
other funds that are not listed on the Exchange.\5\ This proposed 
amendment would provide for the ``generic'' listing and/or trading of 
Multi-class ETF Shares under Rule 14.11(l) on the Exchange immediately 
upon the Commission's applicable order granting exemptive relief to the 
outstanding applications. This proposal is not intended to amend any 
other part of Rule 14.11(l) and the Exchange submits this proposal only 
to prevent any unnecessary delay in listing additional Multi-Class ETF 
Shares generically under Rule 14.11(l) when and if such requests are 
granted by the Commission.
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    \3\ The Exchange notes that it had previously submitted a 
version of this filing on April 15, 2024. See Securities Exchange 
Act Release No. 34-100034 (May 1, 2024) 89 FR 35255. That filing was 
withdrawn on November 8, 2024 and submitted this proposal.
    \4\ See Perpetual US Services, LLC (filed February 7, 2023); DFA 
Investment Dimensions Group Inc. and Dimensional Investment Group 
Inc. (filed July 12, 2023); F/m Investments LLC (August 22, 2023); 
Fidelity Hastings Street Trust and Fidelity Management & Research 
Company (filed October 24, 2023); Morgan Stanley Institutional Fund 
Trust and Morgan Stanley Investment Management Inc. (filed January 
29, 2024); First Trust Series Fund and First Trust Variable 
Insurance Trust (filed January 24, 2024); Guinness Atkinson Funds 
(filed February 27, 2024); and Metropolitan West Funds, TCW ETF 
Trust, and TCW Funds, Inc. (filed March 20, 2024).
    \5\ Infra note 6.
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Background
    Starting in 2000, the Commission began granting limited relief for 
The Vanguard Group, Inc. (``Vanguard'') to offer certain index-based 
open-end management investment companies with Multi-class ETF 
Shares.\6\ After this relief was granted, there was limited public 
discourse about Multi-class ETF Shares until 2019, when the prospect of 
providing blanket exemptive relief to Multi-class ETF Shares was 
addressed in the Commission's adoption of Rule 6c-11 under the 
Investment Company Act (the ``ETF Rule'').\7\ The ETF Rule permits ETFs 
that satisfy certain conditions to operate without the expense or delay 
of obtaining an exemptive order. However, the ETF Rule did not provide 
blanket exemptive relief to allow for Multi-class ETF Shares as part of 
the final rule. Instead, the Commission concluded that Multi-class ETF 
Shares should request relief through the exemptive application process 
so that the Commission may assess all relevant policy considerations in 
the context of the facts and circumstances of particular applicants. 
The Exchange adopted Rule 14.11(l) \8\ shortly after the implementation 
of the ETF Rule and, because there were no exemptive applications 
before the Commission and because none of the Multi-class ETF Shares 
that were previously granted exemptive relief listed on the Exchange, 
did not propose to include any language comparable to what is being 
proposed herein.
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    \6\ See Vanguard Index Funds, Investment Company Act Release 
Nos. 24680 (Oct. 6, 2000) (notice) and 24789 (Dec. 12, 2000) 
(order). The Commission itself, as opposed to the Commission staff 
acting under delegated authority, considered the original Vanguard 
application and determined that the relief was appropriate in the 
public interest and consistent with the protection of investors and 
the purposes fairly intended by the policy and provisions of the 
Act. In the process of granting the order, the Commission also 
considered and denied a hearing request on the original application, 
as reflected in the final Commission order. See also the Vanguard 
Group, Inc., Investment Company Act Release Nos. 26282 (Dec. 2, 
2003) (notice) and 26317 (Dec. 30, 2003) (order); Vanguard 
International Equity Index Funds, Investment Company Act Release 
Nos. 26246 (Nov. 3, 2003) (notice) and 26281 (Dec. 1, 2003) (order); 
Vanguard Bond Index Funds, Investment Company Act Release Nos. 27750 
(Mar. 9, 2007) (notice) and 27773 (April 2, 2007) (order) 
(collectively referred to as the ``Vanguard Orders'').
    \7\ See Securities Exchange Act Release No. 33-10695 (October 
24, 2019) 84 FR 57162 (the ``ETF Rule Adopting Release'').
    \8\ See Securities Exchange Act No. 88566 (April 6, 2020) 85 FR 
20312 (April 10, 2020) (SR-CboeBZX-2019-097) (Notice of Filing of 
Amendment No. 2 and Order Granting Accelerated Approval of a 
Proposed Rule Change, as Modified by Amendment No. 2, To Adopt BZX 
Rule 14.11(l) Governing the Listing and Trading of Exchange-Traded 
Fund Shares).
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    As noted above, a number of applications for exemptive relief to 
permit the applicable fund to offer Multi-class ETF Shares (the 
``Applications'') have been submitted to the Commission starting in 
early 2023. In general, the Applications state that the ability of a 
fund to offer Multi-class ETF Shares, i.e., both a class of mutual fund 
shares (each such class, a ``Mutual Fund class'' and such shares 
``Mutual Fund Shares'') and ETF Shares, could be beneficial to the fund 
and to shareholders of each type of class for various reasons, 
including more efficient portfolio management, better secondary market 
trading opportunities, and cost efficiencies, among others.\9\
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    \9\ Specifically, the Applicants believe that a Mutual Fund 
class would benefit ETF class shareholders because investor cash 
flows through a Mutual Fund class can be used for efficient 
portfolio rebalancing. To the extent that cash flows come into a 
fund through a Mutual Fund class, a portfolio manager may be able to 
deploy that cash strategically to rebalance the portfolio. Second, 
cash flows through a Mutual Fund class may allow for greater 
creation basket flexibility for creations and redemptions through 
the ETF class, which could promote arbitrage efficiency and smaller 
spreads on the trading of ETF Shares in the secondary market. With 
respect to existing funds, ETF classes would permit investors that 
prefer the ETF structure to gain access to established funds' 
investment strategies. Additionally, the establishment of an ETF 
class as part of an existing fund could lead to cost efficiencies. 
Specifically, in terms of fund expenses, an ETF class could have 
initial and ongoing advantages for its shareholders, where 
shareholders of an ETF class of a fund that already has substantial 
assets could immediately benefit from economies of scale. Finally, 
the tax-free conversion of shares from the Mutual Fund class to the 
ETF class may accelerate the development of an ETF shareholder base. 
Subsequent secondary market transactions by the ETF class 
shareholders could generate greater trading volume, resulting in 
lower trading spreads and/or premiums or discounts in the market 
prices of the ETF Shares to the benefit of ETF shareholders. The 
Applicants also believe that an ETF class would benefit Mutual Fund 
class shareholders because in-kind transactions through the ETF 
class may contribute to lower portfolio transaction costs and 
greater tax efficiency. Additionally, the conversion feature could 
allow Mutual Fund shareholders to convert Mutual Fund Shares for ETF 
Shares without adverse consequences to the Fund by allowing Mutual 
Fund shareholders to convert their shares into the ETF class of the 
same fund rather than redeeming their Mutual Fund Shares and buying 
shares of another ETF. In doing so, the converting shareholder could 
save on transaction costs and potential tax consequences that may 
otherwise be incurred in redeeming their existing shares and buying 
separate ETF Shares. The ETF class would also represent an 
additional distribution channel for a fund that could lead to 
additional asset grown and economies of scale; greater assets under 
management may lead to additional cost efficiencies and an improved 
tax profile for the fund may also assist the competitive position of 
the Fund for attracting prospective shareholders. Last, the class of 
ETF Shares could allow certain investors to engage in more frequent 
trading without disrupting the fund's portfolio.
---------------------------------------------------------------------------

    While Multi-class ETF Shares could potentially be listed under 
existing Exchange Rules 14.11(c) or 14.11(i), doing so would 
unnecessarily re-introduce the burdensome quantitative portfolio 
requirements and ongoing compliance obligations associated therewith 
that existed before the adoption of Rule 6c-11 and Exchange Rule 
14.11(l).\10\ The Exchange is not

[[Page 92991]]

aware of any clear policy rationale as to why those quantitative 
requirements should apply to Multi-class ETF Shares other than the 
rules are already in place. As such, listing Multi-class ETF Shares 
under these older rules would place undue burdens on both the Exchange 
and fund issuers because of the quantitative portfolio requirements 
that currently do not apply to ETFs meeting the requirements of Rule 
6c-11 and Rule 14.11(l). Furthermore, while the Applicants generally 
seek the same exemptive relief as granted under those previous 
orders,\11\ several Applicants have proposed different conditions to 
the relief that reflect the adoption of Rule 6c-11. Therefore, the 
Exchange believes there is a reasonable relationship between the 
Applications and the proposed rule change to allow for the Commission's 
evaluation of whether the proposed rule change is consistent with the 
Act. The Exchange also acknowledges that approval of this proposed rule 
change would not necessarily result in the listing and trading of the 
additional Multi-class ETF Shares under the proposed Rule until and 
unless the necessary relief was granted by the Division of Investment 
Management, but approving this proposal would address any potential 
concerns the Commission's division of Trading and Markets might have as 
it specifically relates to the listing and trading of Multi-class ETF 
Shares under proposed Rule 14.11(l) and would allow for a smooth launch 
process if an when such relief is granted.\12\
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    \10\ See e.g., Exchange Rule 14.11(c) and 14.11(i).
    \11\ Supra note 6.
    \12\ The Commission has in some instances historically approved 
Exchange listing rules even when no products would necessarily be 
permitted to list under those rules. Most recently, the Commission 
approved Exchange proposals to list and trade shares of ether-based 
exchange-traded products (``ETPs'') prior to any such products 
having an effective registration statement. As those ether-based 
ETPs could not trade on the Exchange without an effective 
registration statement, which were separately considered by the 
Commission's division of corporate finance, the Exchange could not 
list and trade those products even with proper Exchange Rules in 
place. The Exchange believes this example illustrates the 
reasonability of the Exchange pursuing the adoption a proposed Rule 
that would not immediately result in the listing and trading of the 
applicable products thereunder. See Securities Exchange Act No. 
100224 (May 23, 2024) 89 FR 46937 (May 30, 2024) (Order Granting 
Accelerated Approval of Proposed Rule Changes, as Modified by 
Amendments Thereto, To List and Trade Shares of Ether-Based 
Exchange-Traded Products).
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Proposal
    The Exchange proposes to amend Rule 14.11(l)(4) to explicitly 
provide that any series of ETF Shares that is eligible to operate under 
exemptive relief under the Investment Company Act that permits the fund 
to offer a class of ETF Shares in addition to classes of shares that 
are not-exchange traded (i.e., Multi-class ETF Shares) may be approved 
by the Exchange for listing and/or trading (including pursuant to 
unlisted trading privileges) on the Exchange pursuant to Rule 19b-4(e) 
under the Act. The Exchange also proposes to explicitly provide that 
the requirements of any exemptive relief applicable to Multi-class ETF 
Shares must be satisfied by a series of ETF Shares on an initial and 
continued listing basis. Last, the Exchange proposes to amend Rule 
14.11(l)(4)(B)(i)(a) to provide that any series of Multi-class ETF 
Shares that fails to meet the requirements of the applicable exemptive 
relief will be subject to the suspension of trading or removal 
provisions of Rule 14.11(l)(4)(B)(i).
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Act and the rules and regulations thereunder applicable to the Exchange 
and, in particular, the requirements of Section 6(b) of the Act.\13\ 
Specifically, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \14\ requirements that the rules of 
an exchange be designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest. 
Additionally, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \15\ requirement that the rules of 
an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
    \15\ Id.
---------------------------------------------------------------------------

    In particular, the Exchange believes that permitting Multi-class 
ETF Shares to list on the Exchange is consistent with the applicable 
exemptive relief and will help perfect the mechanism of a free and open 
market and, in general, will protect investors and the public interest 
in that it will permit the listing and trading of Multi-class ETF 
Shares, consistent with the applicable exemptive relief, and in a 
manner that will benefit investors. Specifically, the Exchange believes 
that the relief proposed in the Applications and the expected benefits 
of the Multi-class ETF Shares described above would be to the benefit 
of investors. Eliminating any unnecessary delay for additional Multi-
class ETF Shares listing on the Exchange under Rule 14.11(l) will 
simply help accrue those benefits to investors more expeditiously. 
Further, the Exchange is only proposing to amend its rules to allow 
such a series of Multi-class ETF Shares to list on the Exchange 
pursuant to Rule 14.11(l), a change to its rules that will only be 
meaningful if and when the Commission grants such relief to an 
Applicant. To the extent that the Commission does not grant Multi-class 
ETF Shares relief, the proposed change to Rule 14.11(l) will have no 
impact on series of ETF Shares listed on the Exchange.
    The Exchange also believes that amending Rule 14.11(l) to 
explicitly provide that the initial and continued listing standards 
applicable to ETF Shares, including the suspension of trading or 
removal standards, would be applicable to Multi-class ETF Shares 
operating under any applicable exemptive relief, are designed to 
promote transparency and clarity in the Exchange's Rules. The Exchange 
believes that with these changes, Rule 14.11(l)(4) would clearly allow 
for the listing and trading of Multi-class ETF Shares upon the 
Commission's order of exemptive relief.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange believes the 
proposed rule change, by permitting the listing and trading of ETF 
Shares operating under Multi-class ETF Shares exemptive relief, would 
introduce additional competition among various ETF products to the 
benefit of investors.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may

[[Page 92992]]

designate if it finds such longer period to be appropriate and 
publishes its reasons for so finding or (ii) as to which the Exchange 
consents, the Commission will:
    A. by order approve or disapprove such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-CboeBZX-2024-112 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-CboeBZX-2024-112. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for website viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE, 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-CboeBZX-2024-112 and should 
be submitted on or before December 16, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-27477 Filed 11-22-24; 8:45 am]
BILLING CODE 8011-01-P


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